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Economic and Environmental Effects of Agricultural Insurance Programs
This paper observes that over the past decade crop insurance has evolved into the largest subsidy among U.S. farm programs. With the impending elimination of direct payments, crop and revenue insurance and the related "shallow loss programs" will be even more important, especially for program commodities. However, agricultural insurance programs stimulate production of the more subsidized crops and likely result in less diversification of crops, expanded planting on marginal land, and increased potential for adverse environmental effects of farming.